The Future of the Internet

Why the Bancor ICO Sold Out on the Ethereum Blockchain?

Bancor is a protocol on the brink of changing the world. It will be integrated with the Ethereum blockchain. The technology involves smart tokens that could potentially change the way transactions are done.

What is the Craze?

People were excited for the Bancor ICO because it offers the opportunity to leap frog from where you are at to where you want to be from an investors standpoint. For example, the ICO named ‘Waves’ went from a price of $0.2 to over $6 in the last year.

For anyone that doesn’t want to do the math, that means that every $1000 invested turns into $30,000. These game-changing technologies aren’t all dimes and there is potential to lose your money. But if you allocate a small percentage of overall wealth then you aren’t worrying as much about the risk. You can sleep sound at night knowing you have the potential to make everything but not lose everything.

At one point during the fundraiser, I was using ethscan and saw an order of 1,000 Ethereum go across which was insane. The value of that order was over $390,000 at the time. It shows that some big players are definitely interested in this technology.

How the Protocol Works?

The protocol known as ‘Bancor’ is setup with built-in price discovery and a mechanism to manage liquidity for tokens on blockchains that support smart contracts. Each “smart token” holds one or more other tokens in reserve and give people the ability purchase instantly or liquidate the smart token in exchange for any of its reserve tokens, directly through the smart token’s contract. The price is being continuously calculated based on a formula that helps balance buy and sell volumes.

I took a look at the code and whitepaper which gives some interesting points. Being able to have liquidity in a system is probably one of the most important aspects. I know the term “liquidity” may seem foreign to people reading this. It really just refers to buyers and sellers being able to get out at prices that make sense. When they get out the system is strong enough in backing to not crash and therefore can handle the volumes.

Keep in mind that not even the stock market today is able to reach a ‘perfect’ point of liquidity. It is why we see liquidation breaks in price which mean markets fall out for a day or two when buying dries up.

Malicious Attack on Bancor

The attacks on Bancor that occurred today slowed down the processing of the already huge amount of orders trying to buy into the ICO. The hackers did not hit the Ethereum blockchain at all and the fundraiser went on fine. However, there was confusion and many were left with pending transactions that were supposed to be instant buys. Some were mad especially after paying max speed for the gas on the contracts. .

In conclusion, the innovation in Bancor may or may not prove to be something that could change the world. Only time can tell but I’m very pleased with how the idea has been presented and the mathematics behind how it could work. I think the people that bought today have a great potential technology that could offer so much in the long term.